Favorite Teams

Regulators, ratepayer advocates and environmentalists are questioning the cost effectiveness of environmental upgrades at PacifiCorp's fleet of coal-fired power plants, including the massive Jim Bridger plant in Wyoming. (Courtesy of PacifiCorp)
(Courtesy of PacifiCorp)

Oregon's utility regulators, ratepayer advocates and environmental groups have locked horns with PacifiCorp for years over its plans to invest billions in pollution controls to keep its aging fleet of coal-fired power plants running.

Yet new federal regulations limiting greenhouse gas emissions, coupled with an increasingly aggressive stance from local regulators, may be forcing Oregon's second largest utility to a tipping point on coal, jumpstarting a conversation over plant retirements and its future power-generation mix.

"They haven't wanted to answer the question, 'What does your fleet look like in a carbon constrained world?" said Jason Eisdorfer, utility program director at the Oregon Public Utility Commission "Now that there are draft rules on carbon, utilities are forced to take this very seriously, and we have forced everybody to the table in a more meaningful way."

It's no surprise that the coal question has loomed over PacifiCorp's regulatory dealings in Salem. The company relies on 26 coal-fired boilers scattered over five western states to provide about 60 percent of electricity to customers in six states: Oregon, Washington, California, Wyoming, Utah and Idaho.

While PGE and other utilities around the country have been quicker to embrace coal retirements, PacifiCorp has largely stayed its course, proceeding with plans to retrofit its existing fleet of power plants to meet federal rules on haze reduction and mercury emissions.

"They look at environmental rules as an opportunity to retrofit a plant" and make a return on the underlying investment, said Bob Jenks, executive director of the Citizen's Utility Board of Oregon. "They're not looking at the full suite of options, and whether it's an economic decision for ratepayers."

PacifiCorp officials insist retrofitting investments are cost effective for customers, and says stakeholders in Oregon have been asking them to make speculative decisions at a time when carbon rules are in flux.

But the fact remains: None of the pollution controls address carbon emissions. And the first round of federal carbon regulations is unlikely to be the last.

Oregon regulators have expressed increasing frustration with the company's failure to analyze how climate change regulations could affect the viability of individual power plants, and explore possible alternatives.

Oregon's public utility commissioners have repeatedly upbraided PacifiCorp executives for dragging their feet and going ahead with expensive retrofits before they were fully vetted.

Consequently, PUC commissioners refused to allow the utility to charge Oregon ratepayers for some of its pollution control investments in its 2013 rate case.

The commissioners also made it clear they expect better homework by PacifiCorp in the next iteration of its plan, including a full-blown analysis of coal plant alternatives.

To an extent, Oregon has been trying to drive a conversation over which it has limited leverage.

It is home to 30 percent of PacifiCorp's customers, who will be asked to help pay for the environmental retrofits. But none of the coal plants are located here, and state regulators on the eastern side of PacifiCorp's service territory, particularly in Wyoming, aren't gung-ho about losing the associated jobs and revenues associated with coal.

Coal plant retirements would also impact the company's transmission system, which is built to transport and maintain reliability with its current resource mix.

Yet pending federal limits on greenhouse gas emissions issued in June mean that all states are being dragged into the conversation over carbon limits. The draft rules aim to reduce carbon emissions from the nation's power plants to 30 percent below 2005 levels by 2030.

The goals vary by state, and utilities will have considerable flexibility in reducing their emissions by investing in cleaner generation or deploying energy efficiency with customers.

But PacifiCorp's path is complicated by its multi-state footprint, and the fact that it has coal-fired plants but no customers in Arizona and Colorado.

PacifiCorp has started its resource planning process for 2015, and the new federal rules and its environmental policies were at the top of the agenda in a public meeting this week. The company does have plans to retire two coal units in 2015 and convert another to natural gas in 2018.

The company is also holding a series of workshops with staff at the Public Utility Commission to determine exactly what future economic modeling should look like.

The tone of its public comments also seems to be shifting.

"There's no bigger issue before us that transitioning away from a carbon-based portfolio," said PacifiCorp spokesman Paul Vogel. "It's a matter of how we complete that transition in a reasonable manner that doesn't unduly harm our customers or damage reliability. We're taking it very seriously. It's a huge task."

The company's commitment to dig into the modeling wins plaudits from ratepayers and environmental groups. But they're still skeptical.

"We're pleased the PUC has made such strong moves and we hope that PacifiCorp uses it as an opportunity look at other ways of generating electricity in the future," said Megan Decker, a lawyer for the advocacy group Renewable Northwest. "What I wish they had is a business vision that acknowledges that they're 60 percent plus coal in a world where coal has a target on its back."

"They've come a long way," she said, "but there's a long way left to go."